Harvard Business Services

Rick Bell

Jud,

As you know, we form Delaware companies for people. In fact, we form more than 15,000 new Delaware companies per year for people from all across the USA and all around the world. On a good day, we’ll form more than 50 new Delaware companies. There are many companies like ours, except we are different in that we form ONLY Delaware companies. Most of the other companies in this business will form a company in all 50 states.

The Court of Chancery decision you are referring to is one of the most significant stumbling blocks to many entrepreneurs choosing Delaware. The decision may be justifiable to the chancellor, but it is a disaster for Delaware’s image.

When people are making a decision as whether to choose Delaware or their home state, they take a leap of faith that Delaware will be better for them. Specifically, they perceive Delaware as protecting Directors and treating stockholders fairly. This case has everyone thinking that Delaware is unpredictable and makes rogue decisions that could literally assassinate your company even if you’ve been successful in the marketplace.